Investing Wisely -- Dow 30 Industrials - Week #9

Investment Course (a freshman - year Course of Study ) Week # 9

This is week number nine and is your freshman year of learning to Invest Wisely.
As you know, by now, we are using the Dow Jones 30 Industrial Companies in
the pursuit of learning / applying analytics and of course - the art and science
of Investing Wisely.

Note: The format for this week has been cut back on the supportive notes,
information and data I included in the seventh week. So at the beginning
of my second, six week rotation of 5 Dow components per week - in week 13
I will again repeat the longer version with more supportive notes. To visit
my latest 'long version' click on the following URL. It was - April 22nd.

Introduction - (what to learn this week?)

For this week, I am continuing to walk you through the Dow 30 component companies
for the second time. This will continue until you feel you have a grasp on
how to focus your investment dollars in securities that offer the highest probability
of profit with a fair (not Wall Street or Media slanted) risk ratio.

Regarding "round two" of going through the Dow 30 components 5 at a time --
I will be encouraging you to begin to hone your talents on Screening or Scanning
the services for data and information.

Now that you are acquainted with the various financial (data and information)
services. we move on just a little. You should have been studying each of them
thoroughly and learning the basics (good and bad) for each.

It is likely you will get sick of the repetition and feel like this is not
necessary. I will repeat what I have shared before. I still go through the
basic analytics of these companies and many more every single week. I am also
profitable for every single year, and that is a lot of years. Few financial
analysts whom I know go through this discipline, and I know of no investor
that even comes close to "do his or her" homework - as thoroughly as I believe
is necessary.

As a freshman you will likely do what most all freshmen do and that is to
convince yourself that you have learned "It All" and do not need the next three
years or a diploma to be successful. If you are of such a disposition or following
young people or perhaps 'traders' STOP and catch up with this course of study.
It is your only hope.

You will notice at the bottom I have also begun to offer you the indexes for
Gold, Silver, Crude Oil and the U. S. Dollar. I hope that adds some bizzaz
to this work you are doing.

I repeat and will continue to repeat: "this 'stuff' is a boring process
and often believed to be an unnecessary exercise in the minds of many investors,
(the mind of a human being is a very peiculiar thing!) but it is also very profitable.

General Market - Current Perspective

The following will be repeated each week: Within my work / analytics
it is important to take into account the current position of the general market
/ sectors / industry groups and the economy as it relates to the companies
that are being valuated. This is one of those - first things first situations.
It is a fact that 60% of the influence of the direction of any security is
that of the general market - bullish or bearish. A 20% influence is on the
Sector and Industry Groups. That leaves only 20% for the Companies itself.
I suggest two things: a) that you confirm my numbers and b) that when you invest
that you had better - be in phase - with the bullish or bearish direction of
the general market and sectors / industry groups. It is up to you to believe
or dismiss this information. I urge to do your homework well and be very selective in
the companies you take positions in. Many followers of my work / analytics
- write to me with ridiculous remarks about the above and other important axioms
of the marketplace. That my friends, is both dumb and totally ego centered.
These people will ARE'T and NEVER will be consistent and profitable investors!

The general market is currently and remains over-valued, over-bought and is
showing serious signs of deterioration, especially in the area of breadth.
Interest rates are on the rise, and inflation is already an acute problem.
These Dow 30 Industrials along with many other companies are quite vulnerable
to a meaningful general market pullback. That means that you should strongly
consider holding cash or perhaps taking bearish positions. I do not recommend
taking short positions in any of these securities.

So - what is new to consider in the marketplace for this past week? Nothing
except the marketplace has taken a pounding as anticipated. It will be my teachings
and my boring advice that hopefully will provide you the ability to develop
patience and discipline waiting for a change / changes of direction of this
marketplace. I call that an Inflection Point Analytics.

For me that is an easy question and will be for you, if you do your homework.
The pullback this past week remained right on schedule and should continue
to do one of two things. The first is what most investors think and that is
to assault the previous highs and create what is often called a break-out.
I agree that this is a possibility. However, I have been waiting for a General
Market Bearish Inflection Point for three plus months. So, as of this posting,
I believe that we are much closer to a meaningful pullback than going - meaningfully
higher. Yes the strongest Companies and Sectors are already higher but the
vast majority is Not! This is particularly true with the Dow 30.

My focus for all companies, Dow 30 or others, is - Investing Wisely. My methodology
of taking advantage of the bull / bear fundamental 'rotation,' technical 'cycles,'
and 'inflection points' are especially critical in this marketplace and to
your annual profitability. I believe, most every investor I have ever met can
profit from this course. That is if you / they do your homework well. This
is a vital discipline in today's marketplace.

Companies - Current Perspective

A Ranking, using each of my three (weighted disciplines) -- Comments for
each Company -- and current Numeric Ranking of the position of each
Company within the Dow 30 Industrials should give you plenty hard analytics
work each and every week, but soon you will be doing it like a professional.

Grouping Two: (see below for a list of the six groupings of five -
Dow 30 Industrial Companies.)

Symbol and Current Numeric Ranking within the Dow 30 Industrials

Category

Fundamental(weighting 40%)

Technical(weighting 35%)

Consensus(weighting 25%)

(CAT) Ranked: # 1

Bellwether

Very Good

VeryGood

Good

Comments: Currently, at $111. it is hanging
tough, but that is when they bit you some place that is not desirable.
The company does not look as healthy to me as analysts portray. However
CAT is carrying a #1 Ranking against its Dow peers. Fundamentally, CAT
is quite strong. It is definitely a hold with caution. Technically,
it looks like it is topping. Consensus wise, it is "good."

(HD) Ranked: # 19

Bellwether

Good

Good

Good

Comments: Currently, at $37 just where it was
6 weeks ago. The company has dropped in ranking from 10th to 19th in these
six weeks and that means something is seriously wrong. The only thing I
find is that executives and insiders are selling heavily and that is extremely
negative. Fundamentally, it is clear that Home Depot is looking
better than some of its peers - but not enough better to invest. Technically,
it is a subtle mover. I hate that characteristic and suggest you do too. Consensus wise
it is "good."

(KO) Ranked: # 13

Bellwether

Very Good

Very Good

Good

Comments: Currently, at $66. and where it was
6 weeks ago. It has moved down in Ranking against its Dow peers. Fundamentally,
KO is making a positive moves that could be sustained. However, it is a
very conservative company and does not produce much growth. Technically,
maybe there is another bounce on the upside? Consensus wise it is
one of the strongest, but remember this is "distorted" data and may / often
does fool you.

(DIS) Ranked: # 12

Bellwether

Very Good

Very Good

Good

Comments: Currently, at $43. and where it was
6 weeks ago. It has dropped just a bit in the
Rankings. Remember, these are "Bellwether" companies that are not supposed
to be volatile. Fundamentally, I feel it is strong. Technically,
it alsolooks strong but be VERY careful over the near-term. Consensus wise
it is not doing well.

(DD) Ranked: # 2

Bellwether

Very Good

Very Good

Very Good

Comments: Currently, at $55. about where it
was past 6 weeks ago. It is however the #2 Ranked company! Fundamentally,
the near-term looks quite positive, however, the above numbers signal you
do not want to remain too optimistic about the coming years. Technically,
It looks like it could rally again. There is a very positive Consensus picture.
Your job is to remember is it currently rather strong and when that
starts to deteriorate it is usually too late.

In my 'Longer Version I have five (rather detailed) Notes: Again,
click on the above URL to visit my last 'Longer Version' of this Course of
Study. That would be Course # 7.

Commodities - Current Perspective

Four for focus: These four commodities are offered in order to compare their
on going analytics with that of the Dow 30 Industrials.

This presentation each week will be a simple update of the Technical picture.
Fundamental and Consensus Analysis is much too complex to present in this format.
However, understant in order to invest wisely in an appropriate ETF or Company
the work / analytics is much the same as for any common stock.

Symbol and Name

Category

Fundamental(weighting 40%)

Technical(weighting 35%)

Consensus(weighting 25%)

Gold ($GOLD)

Bellwether

Very Good

Excellent

Very Good

Comments: Currently, at $1,474., down almost
6 percent for the week. Gold is and has moved up strongly and has been
a leader since late 2008 - that's a long time. Has it now been too long
a time? Current Technicals: I have suggested for weeks, that it
looks like it is topping and has looked that way for a long time. It can
just keep doing its thing for awhile longer. If you were worried during
the January 2011 pullback you can expect yet another pullback, and quite
likely - more severe!

This beginning of a pullback, should not be taken lightly.However, looking
at the near-term and not wanting to "experience a meaningful pullback" -
I suggest that prudence says that if Gold starts looking like it did in
November and December that it could become a sell.

This is a major alert!

Students and investors alike should develop an exit strategy. Few investors
ever even consider that (an exit strategy) is a most important part of
their investment philosophy!

Silver ($Silver)

Bellwether

Very Good

Excellent

Very Good

Comments: Currently, at $34., down 27+ percent
for the week. ( Gold & Silver track each other very well historically)
Silver is and has moved up strongly and has also been a leader since late
2008. Current Technicals: I suggest you re-read the above Comments on
Gold.

This is a major alert!

Crude Oil ($WTIC)

Bellwether

Very Good

Very Good

Very Good

Comments: Currently, at $99.9., down over 12
percent for the week. Crude Oil has been tracking Gold/Silver and the above
is also applicable to this commodity. However, the current picture is becoming
much more negative. I believe it has started to look like the topping action
of December / January. This simple means caution. Six weeks ago I said: "Energy
in general is not holding up nearly as well as Crude Oil. That should be
a warning of some sort?" Well, warnings are always worth checking out and
as a student you should - 'check this possible situation out.'

My warnings seem to fall on deft ears.

This is a major alert!

U. S. Dollar ($USD)

Bellwether

Very Good

Very Good

Good

Comments: Currently, at $74.19., at this time
there is nothing to lead one to believe that the Dollar will be turning
up - however!. Current Technicals: I now believe that any turn-up
could well be coincident with a turn-down in the General Market. In other
words - a possible rally in the U. S. Dollar and a pullback in the General
Stock Market?

Stay alert, this could be a very interesting study / scenario for both
students and investors.

The Bottom Line

Your 'bottom line' will depend on just how proactive you are about doing your
homework on the above Companies and perhaps asking questions of the Prof. (that's
me!)

This Week's Home Work Assignment: (Same as last week) Study at least
3 of my "Sources for Screening Securities for the collection information
and data - to be compared" You must learn to Navigate through all that is offered.
(the above will be your - on going homework assignment and will require many
hours if not months - these sites offer much information - some good and some
worthless - but can be very rewarding if you are willing to learn) In addition,
scan Google for other stock market screening URLs, there are several other
very good ones.

Your best source for finding the Internet sources for Screening are in
Google. I want you to plow through this exercise the hard way. I has taken
years to get my "screening" procedures working to near perfection.

Next read up on each of these companies and make some notes from your favorite
sources of information. You may even want to make file folders for each company.
Referring back to your notes can be a valuable learning experience. Remember,
this is boring "stuff" to many investors, but it will provide you accuracy
and profitability in your investment strategy.

More Notes about this Course of Study

You may want to review my 38-week course - Investment Basics with SafeHaven.com.
(see the sidebar on the SafeHaven.com home page or Authors and my name.)

If you are a serious investor and anxious to learn you might want to visit
my personal and private blog. It is updated on Wednesday's and Sunday's with
inserts a coupe times per week. It too is boring, but accurate and profitable. http://twitter.com/#!/InvestRotation

Wishing you a wonderful learning experience and the continued desire to grow
your knowledge. Education is an essential part of living wisely and the experiences
of life, I hope you make it fun.

Learning how to consistently profit in the Stock Market, in good times and
as well as in not so good times requires education, experience, time and unfortunately
mistakes which are called losses. I believe if you will work ast it, you can
be profitable while you are learning?

Let me know if and when I can help and tell a friend about this Course of
Study.

Steve has several degrees, i.e. post graduate degrees and doctorate and a
great deal of (too much) continued education. For seven years, he did a stent
as a University Professor of Finance and Economics.